Five shops a week closing as summer high street sales slump
More shop have closed in Scotland (pic: Terry Murden)
Scotland’s high street crisis is getting worse, with an acceleration in the number of shops closing.
More than five stores per week have shut down in main shopping destinations in the first six months of the year.
One chink of light is that openings are also increasing, though there has been a net decline across eight of Scotland’s largest towns and cities.
Research produced for PwC by the Local Data Company shows the number of shops has fallen from 3,184 in January to 3,130 in July, a net decline of 54. This represents a 1.7% fall in the overall number of shops, compared to 1.83% for the UK as a whole.
Across the UK about 16 stores closed their doors every day in the first half of 2019 while only nine opened, resulting in a net decline of 1,234 chain stores on Britain’s top 500 high streets.
Glasgow saw the highest level of activity with 46 closures, in the first half of the year, offset by 34 openings, resulting in a net change of 1.35%, a slight increase on the 1.22% recorded in the same period in 2018.
In Edinburgh there are now 1,033 shops, down from 1,050 in January, after 37 closures and 20 openings. This gives the capital a net change of -1.65%. However, the opening of the £1bn St James Centre is expected to impact on the retail mix towards the end of 2020.
Aberdeen also performed better than the Scottish average, with a -1.53% net change, following 20 outlets closing and 13 opening.
Dundee was the only city in Scotland without a net loss of stores.
Business rates have impacted the high street, with the most recent revaluation of how much each property is charged leading to calls for reform.
Brexit uncertainty also continues to weigh on the fortunes of retailers. Earlier this year, PwC’s 2019 Retail Outlook revealed that the spending habits of a quarter of Scots (24%) were affected by Brexit in 2018, with a further 22% expecting to cut back this year.
There may be favourable deals out there for retailers looking to expand,– Jason Higgs
Jason Higgs, head of business recovery services for PwC in Scotland, said: “In the last six months the sectors growing their presence on the high street are the likes of convenience stores, coffee shops and fast food restaurants; we are even seeing an increase in the number of bars after a long period of difficulty for the licensed trade.
“Casual dining has been one of the hardest hit sectors as consumers watch their spending. Going out for dinner is one of the first luxuries to go, and that has been reflected in the number of large restaurant chains facing challenges.
“The increase in new openings in Scotland from 58 to 86 is welcome news and indicates that with more vacant premises than a year ago, there may be favourable deals out there for retailers looking to expand, though what is good news for operators is bad news for landlords who are increasingly seeing requests for rent reductions through CVAs.”
Ashley under pressure
Sports Direct’s annual general meeting takes place today and founder Mike Ashley is facing calls to step aside.
Russ Mould of AJ Bell said he will resist pressure to leave the business he set up in 1982. “He has been the driving the force behind what has been for a long time has been a phenomenal success,” said Mr Mould.
A key issue is the appointment of an auditor to replace Grant Thornton which is resigning. If the company cannot appoint an auditor at the close of the AGM, under the Companies Act it must tell the Business Secretary – Andrea Leadsom – within a week that it has the power to appoint an auditor.
The company is valued at £1.9bn, although the shares are at a nine-year low.
Journalists have been banned from the AGM.
Canadian store opens
Canadian athletic apparel brand lululemon has taken a prime unit at 18/20 Royal Exchange Square, Glasgow in a boost to the city’s retail offering.
Founded in Vancouver, Canada in 1998, lululemon is an experiential brand and the Glasgow unit will also host complimentary weekly classes in yoga, health and fitness.
This is the company’s second store in Scotland, after Edinburgh, and 14th store in the United Kingdom.
CBRE let the property, Culverwell acted on behalf of the owner and Gardner & Co for the landlord.
Scottish retail sales fall
Sales fell in August (pic: Terry Murden)
The latest figures from the Scottish Retail Consortium show total sales in Scotland for August decreased by 0.2% year on year and by 0.9% on a like-for-like basis.
Ewan MacDonald-Russell, head of policy and external affairs at the Scottish Retail Consortium, said: “Scottish retail sales were stuck in a holding pattern in August as the continued squeeze on consumer spending and political uncertainty continued.
“Our expectation is customer spending will continue to be focused on essentials, and therefore we’d hope Government would ensure there were no further immediate costs which would stretch hard-pressed retailers even further.”
JD Sports defies slump
Sales in JD Sports shops in the UK jumped 10% on a like-for-like basis, with the company saying customers have reacted positively to its push towards more premium products.
Pre-tax profits hit £129.9 million on revenues of £2.52 billion in the half year to 3 August.
Elsewhere in the UK, its gyms business grew to 120,000 members across 25 gyms, and bosses plan to open four new sites this year.
But there was a disappointing result at its Go Outdoors business, which bosses admitted had poor availability during May and June due to a change in the way products reached the stores and the company’s US brand Finish Line suffered heavily, with the closure of 10 stores and 29 Macy’s concessions.
Despite the positive UK picture Chairman Peter Cowgill had a warning for landlords, hinting that he would expect rent reviews following several high street rivals using the CVA insolvency process which has allowed them to cut rents to avoid going bust.
He said: “We are very aware of the financial benefit that other retailers appear to get when they downsize their estates and, whilst we have no plans to fundamentally alter the size of the JD store network in the UK at this time, we continue to seek fairness and flexibility in the terms of our leases.”